CRM a customer marketing case. 2 Example: “EuroTech” a customer marketing case 2,126 active customers 2,126 active customers $ 9,956,000 Revenues $ 9,956,000.

CRMCRM

a customer a customer marketing casemarketing case

2

Example: “EuroTech” Example: “EuroTech” a customer marketing a customer marketing

casecase 2,126 active customers2,126 active customers $ 9,956,000 Revenues$ 9,956,000 Revenues $ 850,000 Profit$ 850,000 Profit Goal: 50% more Profit (without Goal: 50% more Profit (without

increase in marketing and sales costs)increase in marketing and sales costs)

3

Segment customers in a Segment customers in a Customer PyramidCustomer Pyramid

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

Copyright © 2004 Customer Marketing International

1% of Customers1% of Customers




4

10% Revenues 10% Revenues

Observation – Observation – II

90% Revenues 90% Revenues

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects


Existing customers deliver ± 90% of revenues

5

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects

Observation – Observation – IIII

20% of the customers deliver 80% of revenues


1% of Customers24% Revenues




4% of Customers27% Revenues4% of Customers27% Revenues

80% of Customers20% Revenues80% of Customers20% Revenues

6

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects

Observation – Observation – IIIIII

. . .and more than 100% of profits


114,000 Rev/Cust45,600 Profit/Cust114% Profit






1,160 Rev/Cust-522 Profit/Cust-53% Profit

1,160 Rev/Cust-522 Profit/Cust-53% Profit

2,126 Customers4,680 Rev/Customer399 Profit/Customer9% Profit

2,126 Customers4,680 Rev/Customer399 Profit/Customer9% Profit

7

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects

Observation – Observation – IVIV

5-30% of the SMB customers can move

immediately to the top of the pyramid as share

of customer is low


5-30% arehigh potentials5-30% arehigh potentials

8

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects


+ 10+ 10

Observation – Observation – VV

A 2% net upwards migration of customers can deliver . . .

- 36- 36

2,126 CustomersNo Change2,126 CustomersNo Change

+ 8+ 8

+ 18+ 18

9

. . .+/- 10% more revenues, . . .+/- 10% more revenues, a lot more profit, and a a lot more profit, and a

much higher ROImuch higher ROI


BeforeAfterDifference%

Revenues9,956,00011,306,1001,350,040 +13.6%

Profit850,0001,367,308 +517 ,308 +60.9%

ROI on CRM19%35%16% +84%

Active Customers

2,1262,12600%

Bingo!Bingo!

The CRM Strategy to The CRM Strategy to Increase Profits and ROI Increase Profits and ROI


11

1) Get 'em 1) Get 'em in…in…

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects


12

2) …move 'em up…2) …move 'em up…

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects


13

3) …and 3) …and keep them keep them

in!in!


“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

“Top”

“Big”

“Medium”

“Small”

“Inactives”

Prospects

Suspects

14

Observation – Observation – VIVI

An upward migration only happens when customers

are very satisfied…2121TopTop

>58,900>58,900

8585BigBig

19,000-58,90019,000-58,900319319

MediumMedium4,820-19,0004,820-19,000

1,7011,701SmallSmall

1-4,8201-4,820

154154 InactiveInactive

250250 ProspectsProspects

1,0001,000 Suspects Suspects


15

Observation – Observation – VIIVII

…even reasonably satisfied customers sometimes defect

2121TopTop

>58,900>58,900

8585BigBig

19,000-58,90019,000-58,900319319

MediumMedium4,820-19,0004,820-19,000

1,7011,701SmallSmall

1-4,8201-4,820

154154 InactiveInactive

250250 ProspectsProspects

1,0001,000 Suspects Suspects


Product Dissatisfaction Product Dissatisfaction 14%14%

PricePrice 9 %9 %

New personal relationNew personal relation 5 %5 %

MovingMoving 3 %3 %

DeathDeath 1 %1 %

IndifferenceIndifference 68 %68 %

Product Dissatisfaction Product Dissatisfaction 14%14%

PricePrice 9 %9 %

New personal relationNew personal relation 5 %5 %

MovingMoving 3 %3 %

DeathDeath 1 %1 %

IndifferenceIndifference 68 %68 %

Why industrial Why industrial customers defectcustomers defect

Source: McKinsey Quarterly

17

Observation - Observation - VIIIVIII

Marketing, sales and service are charged with influencing

customer behaviour…


21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects

MarketingSales

Service

MarketingSales

Service

18

Observation – Observation – IVIV

…but other departments involved with customer

processes often have more influence

on customers

21Top

>58,900

85Big

19,000-58,900319

Medium4,820-19,000

1,701Small

1-4,820

154 Inactive

250 Prospects

1,000 Suspects

MarketingSales

Service

MarketingSales

Service

ReceptionServiceAccountsProductionLogisticsChauffeurs“Back Office”

ReceptionServiceAccountsProductionLogisticsChauffeurs“Back Office”


19

ConclusiConclusionon

Profits come from positive customer performance...

ProfitsProfits

Customer Customer PerformancePerformance

Customer ProfitabilityCustomer Profitability

Customer BehaviourCustomer Behaviour

Customer SatisfactionCustomer Satisfaction

ProfitsProfits






20

...but the whole company ...but the whole company needs Customer Focus to needs Customer Focus to

make it happen!make it happen!

Customer FocusCustomer Focus

Organization * Information * CommunicationOrganization * Information * Communication




21

ProfitsProfits





ProfitsProfits









……the right thingsthe right thingshappen here!happen here!

……the right thingsthe right thingshappen here!happen here!

If you do things If you do things right here…right here… If you do things If you do things right here…right here…


22

But if you can't measure it, you can’t plan But if you can't measure it, you can’t plan and manage it!and manage it!

ProfitsProfits





ProfitsProfits









AccountantsAccountantsAccountantsAccountants


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CRM a customer marketing case. 2 Example: “EuroTech” a customer marketing case 2,126 active customers 2,126 active customers $ 9,956,000 Revenues $ 9,956,000.

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